What is Council asking me to do?

We are asking residents and ratepayers to consider the options for the future funding of Council services and provide their feedback by 31 October 2010.

Waverley Council currently provides 148 services – ranging from cleaning and greening parks and beaches and providing childcare to running popular facilities such as the Bondi Pavilion and Waverley Library.

We are proud to provide such an impressive range of services to help strengthen, build and nurture the community. However, over the next 12 years the cost of providing existing services alone is projected to rise by 50%, yet our overall income is set to rise by only 31%.

Over 30 years of rate pegging has resulted in a steady decrease in councils’ rates revenue. Most councils are able to rely on rates for at least 40-45% of their income. In contrast, Waverley raises less than 30% of its income from rates.

This is not a sustainable financial structure, and it is leaving our services very vulnerable.

We need to find a stable source of revenue beyond the fluctuating revenue streams that flow from asset sales, parking fees, developer charges and investment earnings. Before we make any decisions around the structure of that funding, we want to know what you think about the options - these are outlined in our brochure Funding the Future: Have your say!

What are the funding shortfalls?

Council has been able to identify funding for 91% of existing services and 54% of requested enhancements identified in our community plan Waverley Together 2.

Over the next decade Council needs to find an extra $125 million to fund existing services, and a further $99 million is required for enhancements. The total of $224 million represents a 14% gap in required funding.

See Fact Sheet 2: Financial facts about Service Plus.

Why does Waverley need so many services?

It’s true our services have grown enormously in recent years.  In the past decade alone our services and outputs have doubled. There are many reasons for this growth, but mostly the expansion is due to new responsibilities placed on us from other levels of government plus greater demands and expectations from our community.

Last year, as part of our Waverley Together 2 consultation, we asked our residents and ratepayers what their priorities were for Council’s future services.  The overwhelming response was that our current services were highly valued, with most people wanting to see our services further enhanced.

The results of this community consultation process are reflected in the Waverley Together 2 vision and a large number of the service priorities identified by our community are contained within our Service Plus package (see What is Waverley Together 2? and Fact Sheet 6: What you asked for in Service Plus).

Who decides the type and scope of services that Council provides?

The services delivered by Waverley Council are in accordance with its responsibilities under the Local Government Act as a vital level of government (see What services is Council responsible for under the Local Government Act?).

Under the Local Government Act, councils are no longer just about basics like assets and waste. They are now equally responsible for ensuring strong social cohesion, a full lifestyle for everyone, a sustainable environment and for making sure that everyone gets a fair share of the benefit and quality of life to be had from such assets and services.

What services is Council responsible for under the Local Government Act?

Minimum services are specified in the charter for councils under Section 8 of the Local Government Act. Key deliverables are:

-To provide directly or on behalf of other levels of government, after due consultation, adequate, equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively.

-To exercise its functions in a manner that is consistent with and actively promotes the principles of multiculturalism.

-To promote, provide and plan for the needs of children.

-To properly manage, develop, protect, restore, enhance and conserve the environment of the area for which it is responsible, in a manner that is consistent with and promotes the principles of ecologically sustainable development.

-To bear in mind that it is the custodian and trustee of public assets and to effectively plan for, account for and manage the assets for which it is responsible.

-To engage in long-term strategic planning on behalf of the local community.

-To exercise its functions in a manner that is consistent with and promotes social justice principles of equity, access, participation and rights.

As guided by the charter, we deliver "on behalf of other levels of government" services that are vital to the community. We deliver these wherever we have a comparative advantage and in many cases can fill service gaps more efficiently than any other level of government.

Has Council mismanaged its funds?

No. Waverley Council has taken great care to find alternative income and cost savings to reduce the burden of service provision for ratepayers and residents. We have also been innovative in financial planning to realise substantial benefit to the community.

In fact, Waverley Council’s entry to the 2010 National Awards for Local Government Working within an integrated community planning process to achieve sustainable asset renewal won the ‘Asset and Financial Management’ category.

Waverley Council’s income is no longer expected to grow at the same pace as the expected growth in costs of existing services. While income has doubled in the last ten years, we managed to more than double the service array and outputs.

Our two biggest sources of income – rates and parking – won’t grow fast enough in future to keep up with inevitable growth in the cost of existing services.

Council is also absorbing significant cost shifts from other levels of government – our annual costs are now approximately $6 million higher as a result of this cost shifting.

What are the funding options?

Council is considering a range of options to fund Service Plus and is asking the community to provide its views on how best to fund Service Plus over the next 12 years. These funding options are:

a) enhance services to maximise our chances of realising the community vision identified in Waverley Together 2, or 

b) maintain the services we have but without enhancements thereby diminishing our chances of realising the vision, or

c)  reduce services and/or service levels and move away from the Waverley Together 2 vision.

For further information see Fact Sheet 3: Options for Service Plus.

What are the positives and negatives of each funding option?

Each choice, even the choice to reduce services, comes with a cost. Put simply:

a) The choice to maintain existing services plus the enhanced services needed to realise the vision of Waverley Together 2 will cost the community in the form of increased rates and user charges, but will minimise the long-term cost to the community of service provision.

b) The choice to maintain existing services without enhancements will also cost the community in the form of increased rates and user charges, (although obviously not quite so much as in option a). However, it will increase the long-term cost of service provision and asset renewal, thus shifting the burden to a future generation.

c) The choice to reduce services will involve the smallest increases to rates and so has the smallest short-term cost. But it will result in the greatest increase in long-term cost for restoration of services, the vast majority of which are not ‘discretionary’. These services are inevitable in the sense they deal with needs that will not go away. If reduced, delayed or deleted, the cost to restore them will be greater over time than the cost of their steady continuous maintenance through that same time period.

For further information on this topic see Fact Sheet 3: Options for Service Plus.

How much would my rates need to rise to cover the shortfalls?

If the projected shortfalls were to be funded by rates, it would mean that in seven years rates would need to be:

-just over 70% higher than they are now if Council is to sustainably fund existing services (compared to the 20-25% increase that is expected to continue under the rate capping system), or

-around 120% higher than they are now if Council is to sustainably fund existing services plus the enhancements requested during consultation on Waverley Together 2 (compared to the minimum 20-25% increase that is expected to continue under the rate capping system).

Taken as a series of flat annual increases, these rises would be between 8.79% and 12.59% per year depending on the level of services funded.

These increases seem large when expressed in percentage terms. However, Waverley’s residential rates are very low compared to those of other Sydney councils.

What about people who struggle to pay increased rates?

The potential rises for minimum and average ratepayers are considered small and gradual enough to be affordable for the vast majority of our ratepayers.

Relief under hardship provisions will continue to be available for the minority who may find rate increases difficult to cope with. Regardless of whether the rate rises are approved, pensioner rebates of $250 per annum will continue to apply for eligible pensioners.

What is the current rate cap for Waverley Council?

State Government rate capping (or rate pegging) currently averages out at a rate of 3.4% annually. The percentage fluctuates – for example, last year it was 2.6%.

Why did my rates go up more than 2.6% this year?

Some ratepayers will have noticed that their rates increased this year by more than 2.6%. Others will have noticed that their rates have actually dropped. This is because the NSW Valuer General has re-valued land in Waverley and this has changed the land values in some Waverley suburbs, relative to the land values in other Waverley suburbs.

Under the Local Government Act, councils are required to apportion rates based on a ratepayer's share of the total land value in the area. The shift in relative land values has therefore led to a necessary shift in relative share of the total rate burden to be borne by each ratepayer.

However, this does not mean that Council's total yield of rates has risen by more than 2.6%. The permitted increase in Waverley Council's total yield of rates this year was 2.6%.

 

What other funding sources has Council examined?

Council has already assumed increases in variable income in its financial modeling. We’ve assumed increased income from parking services, asset sales, developer contributions, property rents, grants and investments.

Further increases in variable income could come from raising parking fees and fines but these increases would need to be very steep to cover the shortfalls. As such, further increases in income from parking are not likely to be a reliable way of funding the shortfalls in their entirety.

Is a special rate variation a foregone conclusion?

No.This period of consultation is focused on getting the community’s response to the funding options and their attitudes to a special rate variation. After their feedback is received and analysed, Council will make a decision about whether or not to apply to the State Government for a special rate variation.

What if I use fewer Council services than many other people?

It is normal for councils to provide services to the community as a whole even though many of them may be delivered to different individuals – to do otherwise tends to be impractical or inefficient. This focus on wider ‘community good’ is consistent with the way other spheres of government operate in Australia.

Why spread the rate rises out across such a long period of time?

Council is suggesting that rate rises might best be spread over seven years. These slower, flatter rises balance affordability for residents and ratepayers with financial sustainability. The rises would move Waverley gradually closer to a more prudent balance of rates versus non-rates revenue. Rate income currently accounts for less than 30% of Council’s total income. If we want long-term service security, this needs to be closer to 50%.

How would Waverley's rates compare if a special rate variation goes ahead?

If funding is secured for Service Plus, in seven years those on the minimum rate (i.e. 50% of Waverley ratepayers) will still be paying:

-at least 30% less than the expected average rate for Sydney residents at that time to maintain existing services, and

-at least 10% less than the expected average rate for Sydney residents at that time to maintain existing services plus enjoy all the enhancements.

If I dont pay rates, should I still have my say?

In Waverley almost 40% of residents don’t pay rates directly, they pay rent. Renting does not disqualify people from this consultation process. The views of all service users are valued.

What arrangements are in place for those who speak English as a second language, or who don't speak English?

A free Translating and Interpreter service (TIS) is available to these residents and ratepayers and key messages have been translated in Simplified Chinese, Greek, Hungarian, Russian and Spanish in communications material such as the Funding the Future: Have your say! brochure distributed by Council. To access the TIS call 131450.

How can the community be sure that Council is getting a fair balance of views?

Council is informing and encouraging the Waverley community to ‘have its say’ through a variety of proven communication channels:

-Waverley-wide distribution of Funding the Future: Have your say! brochure (35,000 households) 

-Waverley-wide distribution of our community newsletter Waverley in Focus, featuring the Funding the Future consultation (35,000 households)

-formal consultation site with additional background information for informed exchange of views and comments (http://haveyoursaywaverley.com.au/councilservices2022)

-Waverley Council website (http://www.waverley.nsw.gov.au/)

-dedicated feedback email address: haveyoursay@waverley.nsw.gov.au

-regular updates through local media including Wentworth Courier, BEAST and Bondi View

-precinct meeting presentations

-emails to those who have previously shown strong interest in community consultation

-alerts via Facebook and Twitter.

Council has also commissioned the Hunter Valley Research Foundation to conduct a statistically-valid survey of residents’ and ratepayers’ attitudes to the:

-importance of the vision and targets for what life should be like in Waverley by 2022

-capacity of various parties to contribute to achievement of the vision

-importance of Service Plus to achievement of the vision

-cost-effectiveness of Service Plus

-affordability of Service Plus

-alternative means of funding Service Plus

-impacts of loss of service if Service Plus is not supported.

What happens if we don't opt for a rate rise or support the enhanced services package?

If the community clearly prefers to reject Service Plus then Council will need to take steps to balance the budget. This will mean that:

a) rates would increase by 25% over the next seven years, and

b) expenditure on services would be cut by an average of 10% (approximately $10 million) per year.

In other words, rates would rise but there would be fewer services. For further information see Fact Sheet 7: Life without Service Plus.

When would the rates go up if a special rate variation is approved?

If the Special Rate Variation is approved rates would rise from the first quarter of 2011/12.

What happens after the community consultation finishes?

All feedback received from the community will be collated and reported to Council in December 2010 once the formal consultation period finishes on 31 October 2010. Waverley Council will need to decide before the end of 2010:

a) whether it will submit an application to the State Government for a special variation to rates to cover its shortfalls on service provision from 2011/12 onwards; or

b) whether it will simply increase rates in line with the current rate capping system and cut services to balance the budget.

In short, Council will need to decide how best to achieve or at least move towards financial sustainability.